Pharma's digital revolution turns to Austin as Merck eyes sites for 600-person IT hub

Merck has interest in setting up a 600-person IT shop in Austin, according to the city.

Merck & Co. is eyeing Austin, Texas, for a 600-person IT shop, one of four around the globe, as it amps up in personalized and preventative medicine.

Merck's search for a fourth site follows years of restructuring its IT operations to three hubs in the U.S., Europe and Asia. Among the locations under consideration is Austin, where Merck is asking for incentives to set up shop, according to the city.

At the proposed $28.7 million facility, Merck staffers would collect metadata and design “solution-based platforms for personalized, proactive and preventative healthcare,” according to a summary (PDF) of the project. The City of Austin would throw in $856,000 in development support for the project, according to city documents.

Big Pharma companies are increasingly using data to drive their decisionmaking, starting in early R&D all the way through commercialization as they face heightened pressure to deliver value to the healthcare system.

Merck already has IT facilities in New Jersey, Czech Republic and Singapore. Three years ago, the drugmaker decided to revamp its tech operations around multiple global hubs. In papers filed with the City of Austin, a Merck representative wrote that the company is considering “several cities in various states” for the new project.

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A “secondary hub” in the U.S., according to the company, “could provide us with a strong talent pool, partnerships with a vibrant ecosystem, and a gateway to the future of digital health and science.”

Austin’s city council will discuss the proposal later this week, with a vote possibly coming next week.

A Merck spokesperson confirmed the talks Tuesday afternoon. "We are excited about the possibility to create opportunities as an engaged community partner, and hope that—together—we can connect technology and science to improve or save people’s lives," she said.

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Merck's proposed expansion comes as drugmakers pursue targeted drug development on the one hand and, on the other, beyond-the-pill efforts that couple digital technology with drug treatment and research.

Roche CEO Severin Schwan has been among those who have stressed the importance of data for the industry's future, and a host of drugmakers have entered into partnerships with tech, insurance and other companies to collect data aimed at informing treatment and clinical decisions. For example, Sanofi and Google's Verily business set up a joint venture earlier this year dubbed Onduo, and Novartis has its own digital tech arrangement with Google.

Merck itself has produced the only FDA-approved app for diabetes patients. Other drugmakers are integrating monitoring systems, smart delivery devices and other tech products into clinical trials and pay-for-performance deals with payers.

RELATED: AstraZeneca builds up in-house IT operations with 300 in India

Merck isn’t alone in positioning its IT infrastructure around multiple global hubs to help with that effort. AstraZeneca notably took up the IT restructuring strategy back in 2014 with plans to set up shops in India, San Francisco and Eastern Europe. At the time, AstraZeneca Chief Information Officer David Smoley noted a shift from pharma companies largely outsourcing IT to employing more in-house personnel.

AstraZeneca’s site in Chennai employs 2,000, according to the company.

Merck’s plan comes as it continues to battle in immuno-oncology with Bristol-Myers Squibb. The company late last week touted a new development deal with Incyte to test its I/O star Keytruda with Incyte’s epacadostat in first-line non-small cell lung cancer, bladder cancer, kidney cancer and head and neck cancer. Bristol followed that up with its own expanded Incyte partnership with Keytruda rival Opdivo.

Editor's note: This story was updated with a statement from Merck.